Scarcity Refers to Limited Resources Due to Resources due to which, The Economic Problem Arises

Author Introduction:

Hey! I’m Rishita from Grade 9A. Math and Economics enthral me the most!

     Needs are the basic necessities of a human being without which he cannot survive, such as food, water, shelter and so on. Wants, on the contrary, are desires that humans yearn for to possess, but can do without. With the aim of satisfying these needs/wants, resources are used. A resource would be referred o as something that is used in the production of other needs and services; these may be natural (land, reserves, labour) or man-made (capital & entrepreneurship).

     In order to satisfy our requirements and maximize economic welfare, such resources are availed. However, the condition that prevails when the capacity of existing resources fail o accomplish our unlimited wants is SCARCITY. For instance one can say that fresh water is globally scarce, and so are the non-renewable resources (coal, petroleum). As a consequence, other predicaments, such as the economic problem, stem from scarcity.

Principally, the basic economic problem revolves around the notion of finite resources and infinite human needs/desires. It suggests that scarcity leads to choosing from alternatives, hence making a CHOICE. When resources are scarce, appropriate economic choices (efficient resource allocation could be one of them) must be made to ensure the nation makes optimum use of resources available. Taking an example, hurricanes have debilitated refineries on the Gulf Coast and thus, The Unites States is significantly facing scarcity of gas for vehicles. As a result of this, the government has had o resort to other means of fuel generation to facilitate transportation.

     Scarcity, by nature, is continuous and recurring. Electricity for example, is scarce and not readily available. The economic problem also has a continuous nature as our wants/desires are perpetual and resources are not suffice. When coping with scarcity and economically allocating resources, the entrepreneur, or at macro level, the government asks three basic questions. Firstly, they will think about WHAT to produce? Is it a Capital (used for producing other goods/services) or Consumer good (an item that is ready for consumption) that they are focusing on? Next, HOW to produce? Will they make use of Capital Intensive techniques, where production is quicker and machines take over human labour, or Labour Intensive? Finally, they will contemplate about FOR WHOM should they produce? Which section of the society will they be targeting? The quality and quantity of their produce varies accordingly. Such as the UK Government, who will reason out whether the sports utility or health care sectors should be enhanced? Are the goods to be manufactured by skilled/unskilled labourers? Once they are constructed, should the goods be distributed at no cost to the poor, or at exorbitant rates that only the rich can bear the expenses of? Another example could be: a nation may also have to determine whether scarce goods (that have a non-zero cost to consume) should be extensively available to the rural population or not? Almost every good that individuals/society consumes cost something, and are scarce.

     In conclusion, the economic crises that most nations face are a result of scarcity. If scarcity did not exist, all goods and services would be free! Thus to overcome them (even to an extent) we must make an effort to seek for alternatives!